Economics of Enterprise Answers

Look at the chart displaying the human development index (HDI) worldwide, which is linked to a high standard of living. Based on what you know about developing and developed countries in the world, which sentence is correct?

how do traditional societies deal with the production problem ?

If a stock is expected to pay a dividend of $50 for the current year, what is the approximate present value of this stock, given at discount rate of 6% and a dividend growth rate of 4%?

Pharmaceutical companies are diversified firms. they sell products in many different therapeutic categories and engage in a variety of vertical activities. from research and development to sales and marketing. Many pharmaceutical companies spend a fixed percentage of their sales revenue in R&D. Do you think this simple rule of thumb is a good idea?

Explain why a monopolist can increase profits by practising price discrimination
compared with using a single price to maximize profits? What are the different
kinds of price discrimination? What are the necessary conditions required for a
monopolist to be able to practice each kind? Provide one example of each of the
different types of price discrimination. You may use graphs to illustrate.

Many service industries such as restaurants, night clubs, movie theatres and hair
dressers experience much higher demand during weekends compared to week
days. Explain a pricing strategy which would increase profits compared to a
single price profit maximizing strategy. Be sure to include a graph which
explains your demand, marginal revenue, and marginal cost. (20 marks)

You have been asked by your boss to report on the expected profits from a single
price strategy compared with a two-part pricing strategy. The estimated demand
for the firm’s product is:
Qd = 400 - 0.2P.
Per unit cost is estimated as constant at $1,000.00. Provide a report which
explains the profits from a single price profit maximizing strategy with a twopart
profit maximizing strategy involving a fixed fee plus a per unit fee. Assume
that total fixed cost is $30,000. What is the optimal fixed fee? Why does the twopart
pricing policy increase total profits? (20 marks)

The market demand for woozles is given by:
Qd = 2,400 – 20p
There is only one available technology, and it is employed by all producers—
actual and potential. It implies the following average cost function:
AC = 625q–1 + 0.25q
Currently, 20 firms serve the market.
The individual supply curve is the part of marginal cost (MC) curve after the intercection with average variable cost (AVC) curve. MC is the derivative of TC curve. MC = TC = (AC*q)= (625 + 0.25q^2)= 0.5q, so Ps = 0.5q or qs = 2p.
The industry supply curve is the sum of 20 individual firm's supply curves, so Qs = 20*2p= 40q
The short‐run competitive equilibrium price and output is in the point, where Qs = Qd, so:
40p = 2,400 - 20p,
60p=2400 > pe=$40
Qe=40*40=1600 units
Individual competitive output is q = 1,600/20 = 80 units.
TP=(P – AC)*q = (40 - (625/80 + 0.25*80))*80 = (40 - 27.8125)*80 = $975

E- Determine the long‐run competitive market price and quantity and how
many firms will operate.

Hi,

Below are my two questions.
a) Suppose the monthly income of an individual increases from Rs 20,000 to Rs 25,000 which increases his demand for clothes from 40 units to 60 units. Calculate the income elasticity of demand.
b) Quantity demanded for tea has increased from 300 to 400 units with an increase in the price of the coffee powder from Rs 25 to Rs 35. Calculate the cross elasticity of demand between tea and coffee.

"Emerging economies, such as china, pose a threat to the comparative advantage of the U.S". How can such a statement be evaluated using the insights learned from the standard trade model? Provide full verbal and graphical explanation.